Bank Austria’s Snowball clause illegal

Businessn.a. ♦ Published: July 6, 2010; 00:00 ♦ (Vindobona)

The unilateral termination right of Bank Austria in its "Callable Snowball Floater " is unlawful according to the Supreme Court (OGH).

Bank Austria’s Snowball clause illegal / Picture: © Uni Credit Group Bank Austria

The Consumer Information Association (VKI) had sued Bank Austria on behalf of the Consumer Protection Department, because of two clauses.

Regarding the interest rate adjustment clause, the bank was proved correct.

The design of the termination right is however discriminatory according to the Supreme Court.

In 2005 Bank Austria issued so called "Callable Snowball…